The mid-term elections in the US could spell disaster for the insurance industry.

After 12 years of Republican majorities in the US Congress, the mid-term national election this November has given control (albeit fragile) of both houses to the Democrats. While this turn about may portend significant changes for the country, in reality, the switch will be like a zephyr playing across an already roiled lake.

The newly empowered Democrats will spend considerable time and political currency in lining up behind the major issues they believe confront the country – ending the Iraq war, reforming health insurance and drug coverage, raising the minimum wage, legalising stem-cell research, and perhaps even mounting a feint at impeaching President Bush. And before the members of the 110th Congress have even comfortably warmed their seats, it will be time to run again and a different president will be elected in November 2008.

Issues that insurance and reinsurance companies have spent a decade and more educating senators and representatives about will not be in the forefront of this Congress, including those such as tort reform, flood insurance reform, repeal of McCarran-Ferguson (an Act that provides a limited exemption to the insurance industry from the federal antitrust laws), optional federal charter, business taxes and estate tax repeal.

One who may have a specific interest in the flood insurance issue is Senator Trett Lott who is now Republican minority whip. Hurricane Katrina destroyed his house. He was not pleased with the settlement and is suing his insurer, State Farm. He may look to introduce measures that could restrict or limit actions by insurers.

Renewal of the Terrorism Risk Insurance Act, which sunsets on 31 December 2007, seems the most likely to gain action from this Congress. The full force of the insurance and reinsurance sector will be pushing for its passage as it is seen as vital to the industry's continued welfare and profitability.

On the state level, Steve Poizner, the new insurance commission in California, has replaced John Garamendi, who was elected lieutenant governor to serve along side Governor Schwarzenegger. Little is known about Poizner but it is hoped he will not be as aggressive toward the insurance industry as his predecessor was.